There are plenty of choices in the Sector – Health category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Select Health Care (FSPHX). FSPHX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Sector – Health funds is an area filled with options, such as FSPHX. Healthcare is one of the biggest sectors of the American economy, and Sector – Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.
History of Fund/Manager
FSPHX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Select Health Care made its debut in July of 1981 and FSPHX has managed to accumulate roughly $7.44 billion in assets, as of the most recently available information. Edward Yoon is the fund’s current manager and has held that role since October of 2008.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 9.31%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -0.42%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of FSPHX over the past three years is 16.89% compared to the category average of 17.39%. The fund’s standard deviation over the past 5 years is 16.73% compared to the category average of 17.89%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.73, which means it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. FSPHX has generated a negative alpha over the past five years of -1.64, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FSPHX is a no load fund. It has an expense ratio of 0.68% compared to the category average of 1.13%. Looking at the fund from a cost perspective, FSPHX is actually cheaper than its peers.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Fidelity Select Health Care ( FSPHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.
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